Fed Keeps Rates Steady, As Expected

The Federal Reserve Bank held its monetary policy meeting yesterday. As widely expected, the central bank left interest rates unchanged.

It signaled that rates will remain steady while affirming its commitment to higher inflation. The Fed decision was unanimous, contrary to previous meetings that saw some dissent.

Equity markets closed mixed upon the news.

German Gfk Consumer Climate Improves in January

The Gfk survey on the consumer climate for Germany showed another modest improvement. The index rose to 9.9 in January, beating estimates of an increase to 9.6.

This was a slight improvement from December’s reading of a revised 9.7. The euro brushed aside the data which complements the recent increase in the Ifo business climate report.

EURUSD Holding on Near Support

The common currency is firmly testing the support area of the 1.1000 level. Price action has the potential to post a correction off this level. As long as the support level holds, there are signs of a bullish divergence building up. The upside correction could see the EURUSD back at 1.1072 level.

European Lawmakers Approve UK Withdrawal Agreement

In the run-up to tomorrow’s D-Day, European lawmakers approved the UK’s withdrawal bill. This means that the European parliament seats will also shrink.

The motion sets into play the formal exit from the EU by the UK tomorrow. This also opens an 11-month transition period for the UK to fully withdraw from the European Union.

GBPUSD Remains Subdued

The currency pair is extending declines, but price action is finding support off the dynamic support level of the trend line. Prices remain confined to the range of 1.3100 and 1.2960. A breakout from this level could trigger the direction in the near term. We expect GBPUSD to rise back to the 1.3100 level.

Gold Prices Gain on Fed Meeting

The precious metal regained some bullish momentum after the Fed meeting. The central bank reiterated its stance to keep rates steady while ensuring that inflation will rise. Taking cues from the meeting, gold prices advanced slightly as it attempts to retest the weekly highs.

XAUUSD Needs to Breakout Higher

The current gains in the precious metal is showing signs of exhaustion. Price action is close to testing the January 27^th close near 1582. A breakout above this level is required to pursue further gains. Above this level, the main resistance at 1594 will be critical. Unless gold breaks above this level we expect price action to remain flat.